| DUBLIN, April 10
DUBLIN, April 10 Irish banks are set to ramp up
repossessions of homes whose mortgage holders are struggling as
they tackle the major lasting issue of Ireland's financial
crisis, a parliamentary committee heard this week.
The spectacular property crash that pushed Ireland into a
bailout has left almost one in five home loans, worth 25 billion
euros ($34 billion), in distress with a further 11 billion euros
of investment property loans also not being fully repaid.
While the number of homeowners in arrears for more than 90
days has begun to fall, repossessions are set to rise from low
levels, the chief executives of Allied Irish Banks
(AIB), permanent tsb and Royal Bank of Scotland's
Ulster Bank said over three days of hearings.
Bank of Ireland, which like the other lenders has begun
legal proceedings against thousands of mortgage holders in
trouble, said it did not have a forecast for how many
repossessions would result from the process.
"The key here is that it is not our intention to repossess
anyone's house; the problem we have got at the moment is that
there is a part of the population that are not engaging with us
at all," Ulster Bank CEO Jim Brown told the committee.
"The only route available to us is to go down the court
Ulster said it could end up repossessing up to 1,500 homes
while permanent tsb predicted between 2,000 and 4,000, with a
bias towards buy-to-let mortgages, many of which were taken on
as an investment during Ireland's boom years.
AIB said it believed it would come into possession of at
most 1,000 family homes but that as many as 80 percent of some
2,500 buy-to-let mortgages in deep arrears could be repossessed.
All of the lenders reported an increase in engagement as a
result of borrowers receiving legal letters, with Ulster seeing
the proportion of borrowers not engaging or paying for an
extended period falling to 14 percent from 35 percent when it
last appeared at the committee last year.
CONCERN AHEAD OF ELECTIONS
The predicted increase in repossessions follows regulatory
and legal changes last year that gave lenders more ability to
take over properties after just 351 were taken into possession
via court orders in 2013, according to central bank data.
In Northern Ireland, which as part of the United Kingdom
operates under a less rigid regime, the number of court orders
for repossession tripled to 2,216 in the five years to 2012, a
report by Ireland's department of justice said last year.
Ireland's central bank has also increased pressure on
lenders to restructure mortgages in arrears and the four banks
reported that they had met the targets set down to date.
With parliamentary elections due in 2016 and local polls
taking place next month, the prospect of families losing their
homes will be a concern for the government, although finance
minister Michael Noonan said the threat of repossession had to
form part of the solution.
"The clear objective of the government is that persons in
mortgage distress should continue to live in the family home and
that from the range of solutions available, solutions other than
repossession should apply," Noonan told parliament on Wednesday.
"It is also true that unless repossession is part of the
legal system, there will be no mortgage market because nobody
will lend unless there is legal potential to realise the
collateral. It is part of the legal system."
($1 = 0.7234 Euros)
(Editing by Catherine Evans)